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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Muscle Pharm Corporation (CE) | USOTC:MSLP | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0002 | 0.00 | 01:00:00 |
|
|
Nevada
|
77-0664193
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
4400 Vanowen St.
Burbank, CA
|
91505
|
(Address of principal executive offices)
|
(Zip code)
|
Large accelerated filer [ ]
|
Accelerated filer [ ]
|
|
Non-accelerated filer
[
]
|
|
|
|
|
|
|
Smaller reporting company [X]
|
|
Emerging Growth Company [ ]
|
|
|
|
|
|
|
Page
|
|
|
|
Note About Forward-Looking Statements
|
1
|
|
|
|
|
PART I – FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
Financial
Statements
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets as of September 30, 2018 (unaudited)
and December 31, 2017
|
2
|
|
|
|
|
Condensed
Consolidated Statements of Operations for the three and nine months
ended September 30, 2018 and 2017 (unaudited)
|
3
|
|
|
|
|
Condensed
Consolidated Statements of Comprehensive Loss for the three and
nine months ended September 30, 2018 and 2017
(unaudited)
|
4
|
|
|
|
|
Condensed
Consolidated Statement of Changes in Stockholders’ Deficit
for the nine months ended September 30, 2018
(unaudited)
|
5
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows for the nine months ended
September 30, 2018 and 2017 (unaudited)
|
6
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
(unaudited)
|
7
|
|
|
|
Item 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
24
|
|
|
|
Item 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
39
|
|
|
|
Item 4.
|
Controls
and Procedures
|
39
|
|
|
|
PART II – OTHER INFORMATION
|
|
|
|
|
|
Item 1.
|
Legal
Proceedings
|
40
|
|
|
|
Item 1A.
|
Risk
Factors
|
41
|
|
|
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
41
|
|
|
|
Item 3.
|
Defaults
Upon Senior Securities
|
42
|
|
|
|
Item 4.
|
Mine
Safety Disclosures
|
42
|
|
|
|
Item 5.
|
Other
Information
|
42
|
|
|
|
Item 6.
|
Exhibits
|
42
|
|
|
|
|
Signatures
|
43
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Revenue,
net
|
$
27,388
|
$
24,396
|
$
81,039
|
$
76,597
|
Cost
of revenue
|
18,595
|
16,359
|
55,875
|
54,474
|
Gross
profit
|
8,793
|
8,037
|
25,164
|
22,123
|
Operating
expenses:
|
|
|
|
|
Advertising
and promotion
|
3,589
|
1,952
|
12,241
|
6,079
|
Salaries
and benefits
|
1,856
|
2,640
|
6,305
|
8,530
|
Selling,
general and administrative
|
2,975
|
3,468
|
8,175
|
9,183
|
Research
and development
|
185
|
199
|
605
|
488
|
Professional
fees
|
436
|
1,034
|
1,634
|
2,643
|
Impairment
of assets
|
743
|
—
|
743
|
—
|
Settlement
of obligation
|
—
|
—
|
(2,747
)
|
1,453
|
Total
operating expenses
|
9,784
|
9,293
|
26,956
|
28,376
|
Loss
from operations
|
(991
)
|
(1,256
)
|
(1,792
)
|
(6,253
)
|
Gain
on settlement of accounts payable
|
—
|
—
|
—
|
471
|
Interest
and other expense, net (Note 6)
|
(990
)
|
(858
)
|
(3,463
)
|
(2,526
)
|
Loss
before income taxes
|
(1,981
)
|
(2,114
)
|
(5,255
)
|
(8,308
)
|
Income
taxes/(benefit)
|
(3
)
|
14
|
100
|
118
|
Net
loss
|
$
(1,978
)
|
$
(2,128
)
|
$
(5,355
)
|
$
(8,426
)
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
$
(0.13
)
|
$
(0.15
)
|
$
(0.36
)
|
$
(0.61
)
|
|
|
|
|
|
Weighted
average shares used to compute net loss per share, basic and
diluted
|
15,029,312
|
13,875,119
|
14,783,699
|
13,819,939
|
|
Three Months
Ended September 30,
|
Nine Months
Ended September 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Net
loss
|
$
(1,978
)
|
$
(2,128
)
|
$
(5,355
)
|
$
(8,426
)
|
Other
comprehensive loss:
|
|
|
|
|
Change
in foreign currency translation adjustment
|
(4
)
|
143
|
(19
)
|
160
|
Comprehensive
loss
|
$
(1,982
)
|
$
(1,985
)
|
$
(5,374
)
|
$
(8,266
)
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Additional
|
|
Other
|
|
Total
|
|
Common Stock
|
Paid-in
|
Treasury
|
Comprehensive
|
Accumulated
|
Stockholders’
|
|
|
Shares
|
Amount
|
Capital
|
Stock
|
Loss
|
Deficit
|
Deficit
|
Balance—December
31, 2017
|
14,650,554
|
$
14
|
$
159,608
|
$
(10,039
)
|
$
(150
)
|
$
(161,967
)
|
$
(12,534
)
|
Stock-based
compensation related to issuance and amortization of restricted
stock awards to employees, executives and directors
|
250,000
|
1
|
361
|
—
|
—
|
—
|
362
|
Stock-based
compensation related to issuance of stock options to an executive
and a director
|
—
|
—
|
16
|
—
|
—
|
—
|
16
|
Issuance
of shares of common stock related to the payment of interest on a
related party note
|
81,113
|
—
|
53
|
—
|
—
|
—
|
53
|
Issuance
of shares of common stock related to the settlement of litigation
(see Note 8)
|
333,000
|
—
|
—
|
—
|
—
|
—
|
—
|
Change
in foreign currency translation adjustment
|
—
|
—
|
—
|
—
|
(19
)
|
—
|
(19
)
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(5,355
)
|
(5,355
)
|
Balance—September
30, 2018
|
15,314,667
|
$
15
|
$
160,038
|
$
(10,039
)
|
$
(169
)
|
$
(167,322
)
|
$
(17,477
)
|
|
Percentage of Net Revenue
for the Three Months Ended September 30,
|
Percentage of Net Revenue
for the Nine Months Ended September 30,
|
Percentage of Net Accounts Receivable
as of
|
|||
|
2018
|
2017
|
2018
|
2017
|
September 30, 2018
|
December 31, 2017
|
Customers
|
|
|
|
|
|
|
Costco
Wholesale Corporation
|
38
%
|
26
%
|
25
%
|
26
%
|
36
%
|
21
%
|
Amazon
|
15
%
|
16
%
|
15
%
|
11
%
|
12
%
|
14
%
|
iHerb
|
18
%
|
*
|
12
%
|
*
|
*
|
*
|
|
Contract Termination Costs
|
Purchase Commitment of Discontinued Inventories Not Yet
Received
|
Abandoned Lease Facilities
|
Total
|
Balance
as of December 31, 2017
|
$
308
|
$
175
|
$
232
|
$
715
|
Expensed
|
—
|
—
|
310
|
310
|
Cash
payments
|
—
|
—
|
(396
)
|
(396
)
|
Change
in valuation
|
67
|
(175
)
|
—
|
(108
)
|
Balance
as of September 30, 2018
|
375
|
—
|
146
|
521
|
|
As of
September 30, 2018
|
As of
December 31, 2017
|
Furniture,
fixtures and equipment
|
$
3,641
|
$
3,597
|
Leasehold
improvements
|
236
|
2,044
|
Manufacturing
and lab equipment
|
3
|
3
|
Vehicles
|
39
|
86
|
Displays
|
453
|
485
|
Website
|
462
|
462
|
Property
and equipment, gross
|
4,834
|
6,677
|
Less:
accumulated depreciation and amortization
|
(4,258
)
|
(4,855
)
|
Property
and equipment, net
|
$
576
|
$
1,822
|
|
As of December 31, 2017
|
|||
|
Gross Value
|
Accumulated Amortization
|
Net Carrying Value
|
Remaining Weighted-Average Useful Lives (years)
|
Amortized Intangible Assets
|
|
|
|
|
Brand
(apparel rights)
|
$
2,244
|
$
(927
)
|
$
1,317
|
4.1
|
Total
intangible assets
|
$
2,244
|
$
(927
)
|
$
1,317
|
|
For the Year Ending December 31,
|
|
Remainder
of 2018
|
$
81
|
2019
|
321
|
2020
|
321
|
2021
|
321
|
2022
|
33
|
Total
amortization expense
|
$
1,077
|
|
For the
Three Months
Ended September 30,
|
For the
Nine Months
Ended September 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Interest
and other expense, net:
|
|
|
|
|
Interest
expense, related party
|
$
(559
)
|
$
(523
)
|
$
(1,652
)
|
$
(1,379
)
|
Interest
expense, related party debt discount
|
(155
)
|
(153
)
|
(557
)
|
(460
)
|
Interest
expense, other
|
(28
)
|
(6
)
|
(160
)
|
(14
)
|
Interest
expense, secured borrowing arrangement
|
(251
)
|
(172
)
|
(906
)
|
(397
)
|
Foreign
currency transaction (loss) gain
|
(4
)
|
16
|
(197
)
|
49
|
Other
|
7
|
(20
)
|
9
|
(325
)
|
Total
interest and other expense, net
|
$
(990
)
|
$
(858
)
|
$
(3,463
)
|
$
(2,526
)
|
|
As of
September 30, 2018
|
As of
December 31, 2017
|
2017
Refinanced Convertible Note due December 31, 2019 with a related
party
|
$
18,000
|
$
18,000
|
Obligations
under secured borrowing arrangement
|
594
|
5,385
|
Secured
line of credit
|
1,500
|
3,000
|
Unamortized
debt discount with a related party
|
(774
)
|
(1,331
)
|
Total
debt
|
19,320
|
25,054
|
Less:
current portion
|
(2,094
)
|
(8,385
)
|
Long
term debt
|
$
17,226
|
$
16,669
|
For the Year Ending December
31,
|
|
Remainder
of 2018
|
$
217
|
2019
|
674
|
2020
|
649
|
2021
|
481
|
2022
|
369
|
Thereafter
|
—
|
Total
minimum lease payments
|
$
2,390
|
For the Year Ending December
31,
|
|
Remainder
of 2018
|
$
27
|
2019
|
101
|
2020
|
50
|
Total
minimum lease payments
|
178
|
Less
amounts representing interest
|
(7
)
|
Present
value of minimum lease payments
|
$
171
|
|
For the Years Ending December 31,
|
||
|
Remainder of 2018
|
2019
|
Total
|
Outstanding Payments
|
|
|
|
Endorsement
|
$
102
|
$
140
|
$
242
|
Sponsorship
|
31
|
55
|
86
|
Total
future payments
|
$
133
|
$
195
|
$
328
|
Transaction Type
|
Quantity (Shares)
|
Valuation
($)
|
Range of
Value per
Share
|
Stock
issued to related party for interest
|
81,133
|
$
53
|
$
0.65
|
Total
|
81,133
|
$
53
|
$
0.65
|
|
Unvested Restricted Stock Awards
|
|
|
Number of
Shares
|
Weighted Average
Grant
Date Fair
Value
|
Unvested
balance – December 31, 2017
|
487,267
|
$
2.32
|
Granted
|
250,000
|
1.00
|
Vested
|
(460,267
)
|
1.94
|
Cancelled
|
—
|
—
|
Unvested
balance – September 30, 2018
|
277,000
|
1.77
|
|
For
the Year Ended
December 31,
2016
|
|
Expected term of options
|
6.5 years
|
|
Expected volatility-range used
|
118.4%-131.0%
|
|
Expected volatility-weighted average
|
125.7%
|
|
Risk-free interest rate-range used
|
1.27%-1.71%
|
|
|
For the
Three Months
Ended September 30,
|
For the
Nine Months
Ended September 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Interest
and other expense, net:
|
|
|
|
|
Interest
expense, related party
|
$
(559
)
|
$
(523
)
|
$
(1,652
)
|
$
(1,379
)
|
Interest
expense, related party debt discount
|
(155
)
|
(153
)
|
(557
)
|
(460
)
|
Interest
expense, other
|
(28
)
|
(6
)
|
(160
)
|
(14
)
|
Interest
expense, secured borrowing arrangements
|
(251
)
|
(172
)
|
(906
)
|
(397
)
|
Foreign
currency transaction (loss) gain
|
(4
)
|
16
|
(197
)
|
49
|
Other
|
7
|
(20
)
|
9
|
(325
)
|
Total
interest and other expense, net
|
$
(990
)
|
$
(858
)
|
$
(3,463
)
|
$
(2,526
)
|
|
Payments Due by Period
|
||||
|
1 Year
|
2 to 3 Years
|
Thereafter
|
Total
|
|
|
(in
thousands)
|
||||
Operating lease obligations
(1)
|
$
723
|
$
1,178
|
$
489
|
$
—
|
$
2,390
|
Capital
lease obligations
|
102
|
76
|
—
|
—
|
178
|
Secured
borrowing arrangements
|
2,094
|
—
|
—
|
—
|
2,094
|
Convertible notes with a related
party
(2)
|
2,719
|
18,540
|
—
|
—
|
21,259
|
Restructuring
liability
|
463
|
58
|
—
|
—
|
521
|
Settlement
agreements
|
1,600
|
—
|
—
|
—
|
1,600
|
Other contractual obligations
(3)
|
963
|
161
|
—
|
—
|
1,124
|
Total
|
$
8,664
|
$
20,013
|
$
489
|
$
—
|
$
29,166
|
(1)
|
The amounts in the table above excluded operating lease expenses
which were abandoned in conjunction with our restructuring plans
and is included within the caption Restructuring
liability.
|
(2)
|
See “Indebtedness Agreement” above. Amount includes
interest.
|
(3)
|
Other contractual obligations consist of non-cancelable endorsement
and sponsorship agreements and the minimum purchase requirement
with BioZone. See Note 8 to the accompanying Condensed Consolidated
Financial Statements for further information.
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit No.
|
|
Description
|
|
Form
|
|
SEC File
Number
|
|
Exhibit
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
31.1
**
|
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
**
|
|
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
***
|
|
Certification
of the Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2
***
|
|
Certification
of the Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101**
|
|
The following materials from MusclePharm Corporation’s
quarterly report on Form 10-Q for the three and nine months ended
September 30, 2018 formatted in XBRL (eXtensible Business Reporting
Language): (i) the Condensed Consolidated Balance Sheets; (ii) the
Condensed Consolidated Statements of Operations; (iii) the
Condensed Consolidated Statements of Comprehensive Income; (iii)
the Condensed Consolidated Statement of Changes in
Stockholders’ Deficit; (iv) the Condensed Consolidated
Statements of Cash Flows; and (v) related notes to these financial
statements.
|
*
|
Indicates management contract or compensatory plan or
arrangement.
|
**
|
Filed herewith
|
***
|
Furnished herewith
|
|
|
|
|
|
|
MUSCLEPHARM CORPORATION
|
|
|
|
|
|
Date: November 13, 2018
|
|
By:
|
/s/ Ryan Drexler
|
|
|
Name:
|
Ryan Drexler
|
|
|
Title:
|
Chief Executive Officer, President and Chairman
|
|
|
|
(Principal Executive Officer)
|
|
|
|
(Interim Principal Financial Officer)
|
|
|
|
(Interim Principal Accounting Officer)
|
1 Year Muscle Pharm (CE) Chart |
1 Month Muscle Pharm (CE) Chart |
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